Canadian food suppliers signal more price increases coming to grocery stores this fall

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Canadian food suppliers have reissued notices to grocery retailers informing them of future price increases.

The letter shows that more price increases will hit grocery stores this fall.

In some cases, the price is higher because the Canadian Dairy Commission has approved a second milk price increase this year. The price of gated milk on the farm is set to rise by about 2 cents per liter, or 2.5 percent, on September 1.

Still, dairy processing companies seem to be working on their own growth, warning that there will be a so-called price increase piggyback, which industry observers have warned.

For example, Lactalis Canada said in a letter to its customers that it would need to raise an average of 5% in the domestic market in September this year. This is a rate that takes into account the CDC price increase and the “significant inflation costs” that the company is facing. ..

Arla Foods Canada issued a similar notice, stating that product price increases scheduled for September this year reflect rising costs of milk ingredients and “the impact of inflation across cargo and packaging.” ..

Saputo Dairy Products Canada also said it would raise prices in the 5% range depending on the category.

“Producers face rising production costs, as well as feed, energy and fertilizer costs, which has had a significant impact on this year’s farm gate milk price adjustments,” Sapt told retail customers. I said in a letter.

“In addition to these regulated increases, there was unprecedented and sustained inflationary pressure affecting manufacturing, energy, labor and distribution costs throughout the supply chain.”

Price increases shared with grocery stores emphasize how regulated dairy price increases are exacerbated by additional price increases across the supply chain, senior public policy officer of the Canadian Independent Food Federation. Vice President Gary Sand said.

“The timing of the increase seems to be piggybacking on the regulated increase,” he said. “The net effect is to exacerbate affordable issues and concerns.”

According to Sands, these concerns are especially acute in rural and remote communities where transportation costs and fuel surcharges are high.

“The rising prices of these important products are of particular concern in these communities,” he added.

According to Statistics Canada, prices for food purchased in stores in May were up 9.7% compared to a year ago due to higher costs for almost all grocery carts.

Sylvain Charlevoix, a professor of food distribution and policy at Dalhousie University, said the pace of food price increases could rise to 10 percent before it begins to slow down.

“We expect food inflation to peak between now and the end of September,” he said. “It may actually go 10 percent north before things start to settle down.”

The US Bureau of Labor Statistics said Wednesday that inflation in food consumed by households in the country reached 10.4% in June, the largest 12-month rise since 1981.

Mr. Charlesboa said Statistics Canada is expected to announce a similar food inflation rate when reporting the consumer price index next June.

Soaring prices will put pressure on grocery stores to promote their own branded options, also known as retailers’ own brand, he said.

“Consumers are currently trading sideways or trading in everything and are switching to discount stores,” said Charlebois. “They are really sensitive to living expenses.”

Meanwhile, a letter sent to retailers by suppliers outlining the reasons behind rising costs, he said, is part of an effort to avoid being criticized for “greed.”

“The last thing processors want is to be a scapegoat and blame high food inflation,” says Charlebois.

“Inflation affects all the Canadians there, but it also affects the political economy of food and how the food industry is perceived.”

In a letter to customers, Lactalis states that he is “very aware of the impact of inflation on consumers.”

“As we all know, this cycle of inflation is largely due to the latest stages of pandemic evolution and the global geopolitical situation caused by Russia’s invasion of Ukraine and the ongoing conflict. It is being promoted, “the company said.

A spokesman for an industry group representing food manufacturers said the majority are experiencing significantly higher cost increases from higher, and all are expected to continue to rise throughout 2022.

Anthony Fuchs, Vice President of Communications for Food, Health and Consumer Products in Canada, said:

Extreme weather, the effects of Omicron variants, the blockade, and the significant labor shortage all put pressure on costs, he said.

In addition, the cost of commonly used raw materials such as wheat, grains and oilseed has increased by up to 80% over the past year, Fuchs said.

He said the cost of plastic packaging parts increased by more than 40%, and pulp and paper, the main component of paperboard packaging and boxes, increased by 15-50%.

Brett Bandale

Canadian press

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